Reno Gazette-Journal from Reno, Nevada • Page 25

ielness WEDNESDAY, AUGUST21, 1996 RENO GAZETTE-JOURNAL TODAY'S BIIIEflG Fed won't change interest rates The Federal Reserve decided to leave interest rates unchanged. The reaction on Wall Street was relief, immediately followed by worries about what the Fed might do at its next meeting Sept. 24. The central bank's policymaking Federal Open Market Committee decision not to raise rates had been widely expected. The key federal funds rate that commercial banks charge each other for short-term loans remains at 5.25 percent.

Experts are divided about what the Fed may do next. Some predict the Fed will leave rates unchanged the rest of the year because economic growth appears to be moderating after rising faster than expected the first half of 1996. Analysis, page 3D. Consumers Union: Trooper dangerous Consumer Reports charged Tuesday that 1995-96 Isuzu Troopers and 1 996 Acura SLXs can roll over during sudden turns at low speed, and it demanded a recall of the sport-utility vehicles. The warning was issued at a news conference at which Consumers Union, the publisher of the magazine, released the results of tests conducted earlier this month.

It branded the vehicles, which are nearly identical, with its rare "not acceptable" rating and recommended that the companies either fix the models or offer owners a replacement or refund. The carmakers responded by saying the vehicles meet all current safety standards. Netscape Communications Corp. wants the Justice Department to investigate whether Microsoft Corp. is violating an agreement with the government by trying to push out Internet software competitors.

Gateway 2000 Inc. has lined up two retail chains to sell its big-screen personal computer, departing from its mail-order tradition to showcase the innovative machine that is also part TV and stereo. National Semiconductor Corp. is reducing its work force by 1 70 people. Wackenhut Corrections Corp.

received a contract to design, build and manage a 500-inmate prison from the California Department of Corrections. Jim Wygle has been hired as vice president of operations for Scolari's Food Drug Company. He was employed by Kroger Foods in Ohio for 36 years, most recently as vice president of merchandising. Why are you successful? "I've had a lot of good mentors. I've learned from everyone I've worked for.

And I place priority on the needs of customers, employees and the community." Advice? "A Wygle goal and a vision of what you want to accomplish. A plan of how you want to get there. Share the plan with those who can help you, get feedback and be flexible. Share little successes with others." Did you have mentors? "Bob Shafcr, of the Kroger Co. in Ohio, most recently president of the Columbus marketing area.

I was his vice president of operations. He had more of an impact on me than anyone ever." Diana Frcar Paschall Retailers: Because of incorrect information supplied to the Reno Gazette-Journal, opening dates for some stores in Fire Creek Crossing were wrong in Sunday's Business Outlook. The Ross store will open in mid-Januarv. Office Depot will open Sept. 23.

Circuit City tentatively plans to open in the third week of September. Questions or comments: STEVE FALCONE BUSINESS EDITOR PHONE, 788-6322 FAX, 788-6458 i A THE ECONOMY U.S. trade deficit shrinks 23 WASHINGTON (AP) The U.S. trade deficit, after worsening for three straight months, suddenly shrank by 23 percent as demand for foreign cars, computers and other consumer goods decreased sharply. But in a worrisome sign, the U.S.

deficit with China for the first time surpassed the imbalance with Japan. Many analysts predicted this trend would continue for the next several years as China supplants Japan as America's biggest trade headache. The Commerce Department report Tuesday showed that the June deficit narrowed to $8.11 billion following a revised May imbalance billion. The Clinton administration, ac Interest Slowdown: Fewer homes are being sold in the Truckee Meadows area, but building permits are ahead of last year. By Aric Johnson RENO GAZETTE-JOURNAL Housing sales in the Truckee Meadows slowed in recent months as rising interest rates apparently took their toll on sales.

Single-family home sales have fallen behind last year's pace by 12.5 percent, according to figures from the Builders Association. The association includes most, but not all. of the area's lar builders. Such drop-offs can spark concerns that housing is in a downward trend. Housing experts, however, say they are confident that is not the case.

They say the local economy remains strong and mortgage rates are slowly dropping. "You can't attribute any meaning to (the decrease). We have all these businesses coming in," said Robert Barone, chairman and chief executive officer of Comstock Bank, a local mortgage lender. Commercial construction has increased substantially this year. Businesses are filling space as fast as it is built, bringing in employees.

And that means more demand on housing. "At this point, I haven't seen anything indicating any serious problem," said Mike Clarke, an economist for the Department of Employment, Training and Rehabilitation. "There is going to be an increase of at least 5,000 jobs this year. It means there should be a push for housing of some form," he said. Records snafu puts pilots By John Stearns RENO GAZETTE-JOURNAL Thirty-four Reno Air pilots earlier this month had to undergo additional training in two flying maneuvers after Federal Aviation Administration inspectors questioned how the original training had been recorded.

The extra training essentially was the result of a paperwork snafu by Reno Air, said Spencer Buxton, manager of the FAA's Reno Flight Standards District Office. "They (Reno Air) responded when it was brought to their attention and they volunteered to retrain them and did it immediately," Buxton said. The pilots, all upgraded from first officer (copilot) to captain in Market Day Wall Street: Heavy industrial shares rose as the Federal Reserve confirmed expectations it wouldn't try to slow the economy with higher interest rates. But the widelv anticipated decision already employed as a catalyst for several recent rallies left the rest of the stock market mixed and little changed in another sluggish summer session. The Dow Jones industrial average rose nearly 22 points.

It was the third straight gain for the blue-chip measure, which has crept back within striking distance of its all-time high at 5,778.00, set May 22. The Dow was led by its heavy-industry components such as chemical maker DuPont and aluminum producer Alcoa, which suffer the most when borrowing becomes more expensive, slowing spending on bigger purchases such as cars and houses. But stable demand consumer stocks like Procter Gamble and Merck) which had benefited most from the economic uncertainties confronting investors, were the Dow's weakest issues. And the Standard ft Poor's 500 list of large companies, hich usually moves in sync with the Dow, slipped nearly 1 point Bonds Treasury bond prices were virtually unchanged in light trading as the Federal Reserve prov ed economic forecasters right by deciding to abstain from raising interest rates. The price of the Treasury's main 30-year bond was up 132 point, or 3 1 cents per cused by both Bob Dole and Ross Perot of pursuing wrongheaded trade policies, was quick to claim credit for the better-than-expected June showing.

"We're making progress on all fronts," said Commerce Secretary Mickey Kantor. "We'ro growing jobs, we're growing our standard of living, we're competing in world markets." Through the first six months of this year, the trade deficit is running at an annual rate of 1 05.2 billion, slightly worse than 1 995's deficit of $105.1 billion, the poorest showing in six years. But Joseph Stiglitz, chairman of the president's Council of Economic Advisers, said that the deficit represents just 1.4 percent of the REAIESTATE rates take toll on Housing experts also say interest rates have stabilized near 8 percent after rising to about 8.75 percent in past months. Most blame that spike for the recent slowdown. Buyers simply did not borrow.

"We have been slower. It has been slower for everybody," Comstock Bank's Barone said. Applications have increased now that interest rates have declined, he said. What didn't slow down was permits. Single-family permits for the first six months of the year were way ahead of last year.

But builders associated the growth with a rush to get permits before an impact fee went into effect Feb. 16. The fee range from $1,500 to $1,800 per house. "We pulled a ton of permits in February because the new fee was going into effect," said Bob Lissner, vice president of Lifestyle Homes. Sales nationwide were strong in the first quarter of the year, Lissner said.

"Home sales nationwide took a big jump in February and March," he said. But that rate slowed in recent months, something Lissner also attributes to interest rates. Most economy watchers remain confident that local housing sales will pick up again. "I think Reno is one of the least cyclical markets. It's a place where people want to live.

We have a very good opinion of the future," Lissner said. the past year, had to be retrained in landings and go-arounds when a plane approaching for landing is forced to go around for a new approach because of unexpected runway traffic, weather or other factors. "We didn't ground these guys, we just gave them additional training," said Jimmy Duke, vice president of flight operations for Reno Air. The process took several days to complete. A question arose in an FAA check of Reno Air training records whether the pilots had been trained in a "checking" or "training" phase, according to Duke.

The pilots had training in go-arounds and landings, as required, but the sessions were recorded as training and total economy at present, half of what it was at its peak in the Reagan administration. The Dole campaign, which hopes to make trade an election issue, was not convinced by this argument. "Trade is a glaring deficiency in Clinton's record which goes to the heart of middle class anxiety in this country," said Robert Lighthizer, a deputy U.S. trade representative in the Reagan administration who is serving as a policy adviser to Dole. In accepting the Republican presidential nomination last week, Dole contended that Clinton's trade policies had been a disaster that had led to ballooning deficits, lost jobs and lower wages for Americans.

Pulling permits Building permits were up this year, but sales declined. New homes sales in the Reno-Sparks area. These numbers don't include all area builders but do include most. (year to date) Sales i Closed Aug 1992 Aug 1993 Aug Most builders rushed to get permits before 863 AS 815 939 1996 I ooo 1 199 I 222 mmmmnmmm. T3 655 1376 total 1995 1 410 I 95 1,082 total 1994 I 234 1993 i 1371 1 1 120 i LJ 449 1 992 508 ,.,..1323 in air again checking instead of training only, Duke said.

Checking involves in-flight observance by an FAA inspector. Training involves flying with a Reno Air FAA-approved check airman. "We know everybody was properly trained," said Duke, who added that rather than debate with the FAA, Reno Air chose to reconduct the training. The Reno-based, low-fare airline employs 302 pilots, of which about 165 are captains, Duke said. Pilots must have at least 5,000 hours of flying time to qualify for Reno Air employment.

Reno Air began service in July 1992 with one airplane. It now has 29 aircraft and about 1,900 em-ployeess 1 ,300 of them in Reno. 1 ,000 in face value. Its yield stood at 6.79 percent. Currencies: The dollar hit a four-week high against the yen after a Bank of Japan report implied interest rates would stay low and a top Japanese official said a weaker yen wouldn't hurt the country's economy.

The dollar ended slightly higher against the mark and little changed against other currencies, steadied by a Bundesbank report that showed German money supply growth in July fell to an 8.6 percent rate from 9.6 percent in June. As of 4 p.m. in New York, the dollar traded at 108.35 yen, up from 107.81 yen Monday and the highest since July 24. The dollar traded at 1.4885 marks, up from 1.4872 Monday. The British pound cost 1.5475, up from 1 .5450.

Metals: Gold closed at 387.80 per troy ounce, 50 cents higher, on the New York Mercantile Exchange. Silver closed unchanged at 5. 1 98 per troy ounce. Commodities: Natural gas futures retreated on the New York Mercantile Exchange as Hurricane Dolly moved away from offshore platforms in the Gulf of Mexico, alleviating concerns about a disruption in supplies. Natural gas for October delivery fell 1 3 cents to $2.

1 24 per 1 ,000 cubic feet. Other energy products retreated as the September crude oil contract expired. Lighthizer said the growing imbalance with China represented "thousands and thousands of low-technology manufacturing jobs that have been lost to the United States. If the administration were enforcing U.S. trade laws, this wouldn't be happening." For June, the deficit with China of $3.33 billion surpassed the deficit with Japan at $3.2 billion, the first time in history that has occurred.

For the year so far, the deficit with Japan has declined by 31 percent from its level of a year ago while the deficit with China has continued to climb, rising by 8 percent from the same period a year ago. Analysts said much of the improvement in the deficit with Ja housing Tim DunnReno Gazette-Journal BUILDING: Workers on the job at Centex Homes' Traditions Project in Caughlin Ranch. 1,073 1994 Aug 1995 Aug 1996 2JE an impact fee went into effect Feb. 16. 674 1,427 total 940 total 983 total Michele Lee DePierroReno Gazette-Journal Expect record on Labor Day Expect a record number of travelers over Labor Day weekend, capping what appears to be the busiest summer vacation season ever.

About 33 million plan a trip of at least 100 miles during the three-day holiday, up 2 percent from last year and tying a record set in 1994, according to an American Automobile Association survey to be released today. Behind the boom: a strong economy and high consumer confidence, says Craig Hunt, executive vice president at Holiday Inn. Lower gas prices are also boosting travel, savs AAA's Jerry Cheske. USA Today NYSE Diary DOWilndustrials) NYSE SAP 500 AMEX SAP MldCap NASDAQ Advances: 1,261 Dtctlnw: 1085 Unchanged: 855 105 Total issues; X3l 23 Composite volume: 403,666,280 1495 avg. comp.

422.90O.640 in June pan reflected a shift in Japanese manufacturing abroad, primarily to other countries in Asia, to counteract the effects of a strong yen. They said that U.S. exports to Japan were up only 3.4 percent in the first half of this year. They also worried that the imbalance with China would last for sometime. "It is clear that China will be the next Japan, a constant problem on a long-term basis that will create a lot of trade frictions," said Lawrence Chimerine, chief economist at the Economic Strategy Institute in Washington.

The $2.4 billion improvement in the overall deficit in June reflected a 3.3 percent drop in imports to Eldorado raises $100M By John Stearns RENO GAZETTE-JOURNAL Eldorado Resorts LLC, operator of the Eldorado Hotel-Casino, recently completed a $100 million bond offering to retire bank debt incurred in recent improvement projects and expansion. "We've had in excess of 100 million (dollars) in investments over the last several years," Bob Jones, chief financial officer for the Eldorado in downtown Reno, said, noting the building of The Brew Brothers pub, mezzanine remodeling, construction of suites and other projects. "We're basically a public company now," Jones said. Eldorado went to the public market for investors, mostly high-yield mutual funds and other qualified institutional investors. It currently has no plans to seek equity financing through a stock offering, Jones said.

In late fall pending state gaming approval and bond registration with the Securities and Exchange Commission Eldorado bonds are expected to begin trading on the open market, possibly Nasdaq, at which time individual investors could order the bonds through brokers, Jones said. Bonds tvpicallv are offered in $1,000 units. Eldorado's senior subordinated notes at 10': percent interest are due in 2006. Its first semiannual interest pavment to investors is due Feb. 15,1997.

"The Eldorado has an established and successful operating history, and has generated earnings before interest, taxes, depreciation and amortization (EBITDA) of about $40 million annually over the last five years," according to a press release from Standard Poor's, which assigned the note a rating. The corporate credit rating is BB- and the rating outlook is stable. Standard Poor's said. "The stability of the Eldorado's cash flows and its strong position in the Reno market minimize downside risk," Standard Poor's said. The Eldorado, in particular, we think will do real well," Greg Zappin, associate director in corporate ratings with Standard Poor's in New York, said in citing the company's strong market position and management.

Zappin said he was impressed by the Eldorado and the Silver See ELDORADO on page 3D BankAmerlca 837s Vs Clorox 9478 8 Coeurd'Alene 1514 Comstock Bank 85b R.R. Donnelley 33 Echo Bay 10 'A Gannett 68 -1 GraJtaVonlt. 19'2 7s 4JainLavAon 55s -V Meridian Gold 4Vs Vs Nevada Power 2078 Newmont 533A 7s Norwest 38V2 Pacific Telesis 337s Pegasus Gold 117s Vs J.C. Penney 52V Radlca Games 15w Ralcorp 21B -14 Reno Air 1178 -Ve ROteCh 15 Vie -16 Santa FePac. Gold 13Vs '4 Sierra Pacific 25 -Vb SierraWest Bancorp 13 Southwest Gas 1712 US Bancorp 38V2 -Vis Wells Fargo 257V4 2.